If I remember my last tests correctly, IE7 still has the restriction. But as it's not always exactly 2GiB, but a few bytes less, I recommend the 1GiB block size (maybe even configurable). A further advance of this is: You don't have to download large files in one piece (slow connection anyone?).
Disadvantage: The built-in ZIP tool doesn't support .tar, so an external tool is always required.